Innovative brokers have a long list of ideas to cut costs for employers this year.
Opt-in or opt-out?
One cost-cutting strategy that I am excited about is moving opt-in disability insurance plans to ones implemented on an opt-out (auto-enroll) basis.
Because an opt-in requirement subjects these plans to potential adverse selection, the pricing and underwriting conditions associated with them are inferior to employer-funded group plans that have 100 percent participation and no pre-existing exclusions. Moving voluntary benefit programs to an auto-enroll situation drives pricing and underwriting that more closely resembles group plans.
The DOL recently issued an information letter reinforcing the value of auto-enroll by reaffirming its applicability for disability insurance. Defaulting employees into disability coverage drives huge savings and value.
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